At XSITE Capital, we believe that investing in multifamily properties can be one of the greatest wealth building tools, but we also recognize that one of the main things that holds people back is knowing where to start.
Choosing to invest in a multifamily property is a huge decision that can impact your wealth – both positively or negatively depending on your choice – which is why it’s so important to do your due diligence before committing to an investment.
Investing in multifamily properties can be a lucrative opportunity for both new and seasoned investors when done correctly, so to help you grow the confidence you need for selecting properties to invest in, this blog breaks down 4 important factors to consider when choosing an investment.
The location of a multifamily property is crucial to its success because you want to ensure the property is situated in a desirable and safe neighborhood that has potential for growth.
It’s important for multifamily properties to be in areas with quality transportation, access to amenities, low crime rates and a strong job market.
When most of these boxes are checked, you can generally expect for the property to do well for years to come and that the tenant demand will remain high throughout the duration of your investment.
Additionally, when your investment property is located in a desirable area, you can typically expect rent prices to rise year after year, which means you could potentially earn even more than initially expected on your investment, which is a huge win!
In addition to location, the condition of the property is another important factor to consider when choosing which multifamily property to invest in.
If you choose a property that requires a ton of updates or maintenance, there’s a chance that your return on investment (ROI) will decrease due to the financial requirements of the updates needed.
When initially inspecting a property, you typically want to consider:
When you examine each of these areas, you’ll be able to determine if they are a one time fix or if they will require continual maintenance year after year.
From there, you can weigh the risk versus reward and clearly determine if the property is a good fit for your investment portfolio.
The entire point of investing is to put your money into a place where you will see an even greater return, but in order for that to happen, you must choose avenues that are able to provide you with that outcome.
Generally speaking, multifamily investing is able to do that! That’s why we are huge advocates of this type of investing here at XSITE Capital.
With that, however, we also recognize that not all investments are created equal and before choosing to invest in a multifamily property you need to know the financial facts, which involves the history of the property AND the forecasted income for the future.
To get a solid understanding of a property’s financial history, you want to make sure that you review the property’s past income and expenses. This will give you a great snapshot of what the property is capable of.
After that, it’s important to also consider the potential for growth!
Oftentimes, investment companies (such as us here at XSITE Capital) will buy properties with the help of investors and create a value add plan that increases the desirability of the property, thus increasing the potential for growth.
With these considerations, you can better determine your ROI and ultimately decide if the property is a good fit for you!
Next, you want to consider the vacancy rates and number of units, since these two items directly impact your ROI as an investor.
As an investor, you likely want to invest in a property that has a higher number of units so that you can expect a greater return.
It looks like this:
The higher number of units = the higher number of tenants = higher income from rent = greater return for YOU!
In addition to the number of units, you also want to explore the past vacancy rates of a property in order to understand the history of how the property has performed in the past.
Past rates can sometimes be a good indicator of the overall desirability of a property.
When investing, you typically want to be involved with a property with low vacancy because, again that means higher profits for you as an investor.
Something to remember, however, is that if a property has high vacancy rates that could be due to mismanagement, poor maintenance, outdated features, etc. and oftentimes this can be fixed with a new value add plan that new owners propose.
Because of this, sometimes you have to use your best judgment and decide for yourself if the property has potential for growth and if it does, the reward might outweigh the risk in the end!
Conducting this research on your own can be overwhelming, which is why investors often prefer to join forces with investment groups that take the guesswork of this process.
At XSITE Capital, we do just that and take our market research very seriously when choosing a property!
When choosing a multifamily property to add to our portfolio, we specifically look at:
Here’s a closer look at our market and property selection process:
We won’t move forward with a deal if it doesn’t meet our standards because we know our investors are counting on us!
Overall, investing in multifamily properties can be a great way to generate passive income and build wealth, but it’s always important to carefully consider these four factors before making any investment decisions.
By doing so, you can increase your chances of success and minimize potential risks!
At the end of the day, we believe that when you have the proper education and support, you can confidently start your own multifamily investment journey.
If you’re looking to start your investment journey and have the right people on your side along the way, we’re here for you.
The XSITE Investors Community is for accredited investors where you can receive:
Today, XSITE Capital currently has over $168 million portfolio value, has helped empower and grow over 1,000 minds and proudly has over 800 doors under management.
We welcome new investors daily and would love to welcome you!
Did you know that March is National Credit Education Month? Many times people don’t pay enough attention to their credit until they want to make a big investment, such as purchasing a home or a car.
The only problem with not paying attention to your credit score regularly is that it’s not something that’s a quick fix, so if you wait until you want to make a large purchase and your credit score is lower than what it needs to be, you take the risk of delaying the process.
This is why learning about your credit score and working to raise it on a regular basis is so important, especially if you have the goal of investing in commercial real estate.
Similar to that of a regular real estate purchase, such as a single family home, your credit will help determine the loan amount that you qualify for and what kind of interest rate you receive.
To help you understand the ins and outs of your credit score, in this blog we’ll be covering what qualifies as good credit, how to repair bad credit and what role your credit plays in commercial real estate investing.
You probably already know that your credit score is made up of three little numbers that can make or break a lot of things for you in life, such as whether or not you can buy a car, a house, obtain a credit card or be approved for any type of loan.
The number ranges from 300-850 and it’s calculated by three major components, including your payment history, the amount of debt you have and the length of your credit history.
There are different scoring models that may take other information into consideration, but generally speaking, here’s the ranking:
The goal is to get your credit score as high as possible so that it falls into the “very good” or “excellent” range.
With that said, as long as your score is 670 and above, borrowers will typically qualify you as lower-risk and you can still be granted what you’re needing.
Anything below 670 usually shows a red flag for lenders and it may be harder to receive the loan that you’re seeking.
If you find that your credit score is falling below the “good” category, there are a few things you can do to repair your credit and get those numbers rising.
One of the first things you’ll want to do is run a credit report. This will show you everything that is impacting your credit and could even help you identify any errors that might be negatively affecting your score.
If there are no errors, this report will allow you to see exactly where you need to focus in order to get your score on the rise.
Once you know all of the things that are affecting your score, you want to work hard to get the amount that you owe down and usually one of the best ways to do that is to pay off your credit cards.
Credit card debt has a huge impact on your credit score, especially if you’re using a large portion of your available credit. The faster you can get your credit card debt down, the faster you’ll see your score start to rise.
In addition to paying down your credit card debt, you also want to pay your bills on time, every time! This directly impacts your credit because your payment history accounts for 35% of your score.
This is why it’s so important to set up an auto pay or create some sort of automation for yourself so that you never miss a payment and take the risk of lowering your score.
Aside from paying down your debts and paying your bills on time, you also want to consider how often you’re applying for new credit. Many people don’t realize that when you apply for a credit card, attempt to buy a car or even get pre-approved for a home purchase, these are all hard inquiries on your credit.
A hard inquiry is a necessary step from lenders to pull your credit report to evaluate your creditworthiness, but it can also drop your score 5-10 points. Not only that, but it can stay on your report for two years, which means it will have a lasting effect on your credit as a whole.
Now that you know what qualifies good credit and how to repair bad credit, let’s get into how your credit score impacts your ability to invest in commercial real estate.
You might be wondering why your personal credit matters when it comes to investing and the short answer is because your credit essentially tells somehow how creditworthy you are.
And all that means is your credit helps a lender see what kind of reputation you have when it comes to paying back loans.
You see, when you’re investing in commercial real estate, it’s rare that you’re going to have the amount you need to invest sitting in your bank account. Instead, you’re probably going to need some sort of loan so that you can invest a certain amount and eventually receive an ROI.
And while it’s true that the overall financing process is easier when it comes to commercial real estate, due to the fact that these properties are viewed as less risky by banks, you as the borrower still need to meet certain qualifications – and your credit is one of them!
If you have a score that’s on the lower end, your first step is working to raise it to at least 680 or above, so that you can easily get into the commercial real estate game without having to fight high interest rates on your loans.
Overall, your credit matters for so many things in life, including commercial real estate investing, so it’s best to keep an eye on your score on a regular basis and consistently work to keep it in the “very good” or “excellent” range!
– The XSITE Capital Team
P.S. If you have a solid credit score and are looking to get involved with commercial real estate investing, we invite you to join our XSITE Capital Investors Club!
It’s that lovely time of year again… tax season.
Whether you’re a business owner, employee, solopreneur or anywhere in between, tax season is something we all have to navigate and everyone’s situation looks different.
Your marital status, charitable donations, business expenses and many other factors can qualify you for legal tax write offs and benefits.
But did you know that investing in multifamily real estate can be one of those factors?
Many times when people think about investing, the primary reason they want to do it is so that they see a much greater return on their investment.
And while yes you want to see a steady cash flow for your investments, there are a few other benefits to consider that shouldn’t be overlooked.
When you invest in multifamily properties, you can usually take advantage of a few tax benefits that you’ll thank yourself for come tax season.
One of the first and major tax benefits you can take advantage of when investing in multifamily real estate are depreciated tax losses against the gains of the property.
Depreciation is the term used in real estate to describe the degrading condition of the property overtime.
Over the years, things will break, go out of date or simply need repaired which means the value of the property can decrease. This is completely normal and expected for any property!
The good news is that the IRS doesn’t hold that against you and instead allows you to use that depreciation amount as a tax deduction year after year for 27.5 years.
Why 27.5 years? This is the amount of time that the government rules a multifamily property to be profitable.
This means that as long as your money is invested into a property of this sort, you can reap this benefit for almost 30 years and that’s hard to find anywhere else!
Another option that investors can take advantage of when it comes to taxes is utilizing cost segregation which goes hand in hand with depreciation.
Essentially what this does is accelerate the depreciation of certain aspects of the property, such as appliances, cabinets, etc. inside of the units so that you qualify for a greater depreciation deduction in a single year.
The only caveat with utilizing a cost segregation study is that it only benefits you during your ownership period.
Because of this, when you decide to sell or pull your investment from the property, you can be faced with a higher tax bill… but don’t let that scare you away!
There’s another benefit for investors to contrast this and it’s called the 1031 Exchange.
A 1031 exchange is an investing tool that allows you to defer your capital gains taxes by reinvesting the funds you pull out of a property and put them into another investment property of like kind.
This means that the new property must be of the same nature as the previous.
For example, if you pull your investment from an apartment complex, you can reinvest those funds into a different apartment complex and utilize the 1031 Exchange benefit in order to avoid that higher tax bill.
This will ensure that you continue to reap the Depreciation and Cost Segregation benefits year after year!
Lastly, one of the greatest tax benefits that investors can take advantage of involves passive income.
As an investor of a multifamily property, you receive what is known as passive income. The IRS sometimes refers to this type of income as unearned income.
For a multifamily investor, your earnings come from your investments in rental properties.
Just like active income, which is money received from your job or business in which you are actively involved, passive income is also taxable, but it’s treated much differently.
To qualify for passive income tax benefits, you have to spend less than 500 hours on the business. As an investor, this is usually the case which is good news for you during tax season!
Instead of being involved in the day-to-day operations, you simply invest your money with a trusted group of professionals and they take care of the hands-on work.
This allows you to qualify for huge tax breaks that you typically wouldn’t receive through traditional investing.
It’s for this reason alone that many people choose to work with investment groups like XSITE Capital so that they can trust they will see an ROI, while also benefiting in other ways without having to do a lot of extra work.
If you’re looking to increase your tax benefits for 2023, investing in multifamily real estate could be an option for you! To learn more about the process of getting involved, click here to connect.
– The XSITE Capital Team
Did you know that 66% of Americans set new years goals that are directly related to their finances?
Whether it’s paying off debt, generating more savings, implementing a budget or investing, more than half of the U.S. population have made plans to adjust their finances in the new year.
A recent study has shown that even though these financial goals are still being set in 2023, 81% of people believe that inflation and the overall state of the economy will make it much harder to meet these goals.
As you set your own goals for the new year, maybe you can relate.
You might wonder how you’re going to generate extra money to pay off debt. You may worry that you won’t be able to stay within your budget due to the high costs of everyday living.
You might think that investing isn’t an option because you need every extra dollar after expenses to go towards your savings. Or you might just be overwhelmed with finances in general and aren’t sure which actions to even take.
If this is you, you’re in the right place! At XSITE Capital, our mission is to educate and encourage people to make decisions that are best for them, specifically when it comes to multifamily real estate investing.
We believe that everyone deserves the opportunity to learn and take action on the things that will better their present life and future dreams.
Last month on the blog, we addressed how interest rates, inflation and a possible recession can impact your commercial real estate investments so you can know what to expect with the ongoing economic changes.
With that, we also want to share three main reasons why commercial real estate IS still a good investment in 2023 so that you can take confident action as you work toward your financial goals this year!
The talk of a recession has been going on for a few months now and with a recession people tend to become very cautious about where they put their money.
This is totally understandable because you want to make sure you’re putting your money somewhere that is safe and will produce a quality return for you in the future.
While it’s true that a recession can negatively affect your investments, the good news is that when you invest in multifamily properties, you can rest easy knowing that your investment is protected.
Historically, multifamily assets have shown to be recession resistant because, at the end of the day, people always need a place to stay.
When a recession hits, there’s typically an influx of people selling their homes that they can no longer afford, which means that the demand for apartment rentals or other multifamily properties will see a significant increase.
This is good news for you as an investor in multifamily properties as this can boost the cash flow that you receive thanks to more tenants occupying the property.
Whether or not a recession will actually hit in 2023, we aren’t sure, but what we do know is that people are already taking precautions which means that the demand for rentals is already happening and now is a great time to get involved with investments of this type.
Many times when people think about investing, they jump straight to the stock market because they haven’t been properly educated on how real estate can be a quality investment as well.
The only real problem with solely investing in the stock market is that it can be very unpredictable and can take a massive hit at any given time, especially during economic downturns or world events.
Commercial real estate on the other hand has proven to be trustworthy decades after decades and remains fairly stable regardless of the economic state.
The main reason for this is because housing is and always will be a basic necessity that all people need. Because of this, you can trust that multifamily properties will continue to appreciate in value which ultimately means that you will receive more return on your investment.
This isn’t to say that investing in the stock market is bad. We encourage that too, but more than anything you want to make sure that your investments are diversified – meaning you have money in multiple places – so that if one takes a negative hit, you have the other to fall back on.
One of the biggest challenges that people often face in real estate in general is the ability to receive the funds they need to purchase or invest in a property.
This can become even more difficult when the economy is in a downturn because banks become more strict with their loan process and have more requirements than you might typically see.
While this can cause difficulty for you if you were to purchase a single-family home, there is a much easier financing process when it comes to commercial real estate.
Banks can confidently predict that the cash flow of a multifamily property with multiple tenants will be consistent and steady versus a property that only houses an individual or one family.
What this means for you as an investor is that the bank doesn’t look at solely your income to grant you the loan. Instead, they will look at the details, history and projections for the property so they can accurately gauge the return.
This is why getting involved in deals that have been thoroughly researched and scouted for you is so important and is the very reason that we take our property selection process so seriously at XSITE Capital.
Linking arms with an investment group that takes the time to ensure a property will be lucrative is your best bet to receive a healthy ROI and that’s exactly what we do through our Investor’s Club!
So, if you have big financial goals in 2023 and are looking for ways to make them come to life with ease, we invite you to join us.
When you join the XSITE Investor’s Club, you will receive:
Overall, we’re here to empower and support you in your personal journey!
Here’s to 2023. 🎉
– The XSITE Capital Team
Interest rates, inflation and a recession have been the talk of the country for a large portion of 2022 and as a commercial real estate investor, it’s important that you know what each of these economic hits can mean for you and your investments.
As an investor, interest rates, inflation and a recession all play a huge role in your current and future investments so it’s important that you understand the basics of each and how exactly they all work together so you can remain confident in how you handle your money.
First things first, let’s talk about interest rates.
Throughout the year, interest rates have been ebbing and flowing and each week it seems like we’re seeing something different.
The Fed introduced its first rate hike in March of 2022 and they have continued to raise the rate from there.
As an investor, it’s important to pay attention to interest rates because they directly affect how much money you can borrow and ultimately determine how much you will end up paying back in the future.
Simply put, the interest rate is the amount you are ultimately charged for borrowing money and it’s shown as a percentage of the total amount of the loan.
This is why when interest rates are low, people are typically more quick to invest. When interest rates are high, on the other hand, people tend to become a bit more wary and start to consider if the investment is worth the extra amount of money they’ll owe towards their loans.
So, what exactly causes interest rates to rise?
The main cause of rising interest rates is inflation and inflation happens whenever there’s a high demand for products and services from consumers. This demand causes prices to rise and this concept is commonly referred to as demand-pull.
Another reason that inflation can occur is what they call cost-push. This is when supply costs to create products or deliver services forces prices to rise.
When inflation occurs, we typically see a few things start to happen:
Inflation is also directly linked to a recession, which means that people become very wary of where their money is going.
The good news for you as a commercial real estate investor is that your investment is typically recession resistant in this industry.
The reason being is because one of the main things to go for people during a recession is their expensive mortgage, especially if they’re living far above their means, which means that the demand for apartment rentals or other multifamily properties will see a significant increase.
Additionally, recessions can also make it more difficult for people to receive proper loans that they need to buy a house, so many people will be forced to continue renting.
In fact, history has shown that even though the housing market as a whole tends to take a hit during economic downturns, rental markets remain steady and even outperform other investments.
Essentially, rising interest rates, inflation and a recession can actually boost the cash flow that you receive from your current commercial real estate investments thanks to more tenants occupying the property.
So, what does this mean for your future investments?
Now that you know how your current commercial real estate investments can be affected by interest rates, inflation and a recession, you might be wondering how those three things can affect your future investments, as well.
The biggest challenge that high interest rates can cause for new commercial real estate deals is that the supply can decrease during economic downturns.
It’s for this reason that we always encourage investors to join a trusted Investor’s Club like XSITE Capital’s so that you aren’t having to do the up front research for new deals on your own.
Instead, you can sit back and know that other people are doing that work for you so that you can invest your money into a deal that has been heavily researched and you can trust that you will see a healthy ROI.
Another challenge that high interest rates and inflation can present for new investments is that the financing process may be a bit more difficult than usual.
Generally speaking, the financing process for commercial real estate is much more simple than if you were to invest in single-family properties because these investments aren’t as risky for banks.
The reason for this is because banks can confidently predict that the cash flow will be consistent and steady for a property with multiple tenants versus a property that only houses an individual or one family.
However, during economic downturns banks can become a bit more wary with how they loan their money, so you can expect the financing process to be a bit more challenging during tough economic times.
With that, you still have a much greater chance of getting approved for what you need for commercial real estate investments versus single family properties, so don’t let this challenge steer you away.
Overall, investing in commercial real estate specifically during economic downturns is still a smart move.
In fact, it’s been said that most millionaires are MADE during recessions and the reason for that is because when most people become fearful and stop spending their money, other people use this time as an opportunity to invest their money into places that will perform higher when the economy returns to normal.
While investing during economic downturns is encouraged, it’s important to remember that not all investment opportunities are created equal. For example, the stock market can be a bit unpredictable during this time, but commercial real estate on the other hand has proven to be trustworthy decades after decades and remains fairly stable regardless of the economic state.
The reason for this is because housing will always be a basic necessity and properties will continue to appreciate in value. This is great news for you as an investor and can give you peace of mind when it comes to where you’re putting your money.
As you continue to navigate the economic changes, we encourage you to join the XSITE Capital Investors Club so you can be among the first to get access to new commercial real estate deals and be among the few who use this time as an opportunity to thrive rather than just survive.
We’re here to support you along the way!
– The XSITE Capital Team
Did you know that 90% of the world’s millionaires have built their wealth by investing in real estate?
At some point in your life, you’ve probably heard it said that real estate is one of the best things to invest in because on both sides, commercial and residential, you’re investing in something with the confident expectation that you will receive more money back later down the road.
While it’s true that real estate can be one of the best ways to grow your wealth, the problem is that many people are missing the information and education to really do it well.
And that’s where we come in! Our mission at XSITE Capital is to educate and encourage all who qualify to passively invest in multifamily real estate so they can take advantage of the benefits that this asset has to offer.
Regardless of your race, current resources or access, we believe that everyone deserves the opportunity to learn and take action on the things that will better their present life and future dreams.
We ultimately believe that through proper education, exposure and encouragement, our investors will have an equal opportunity to grow their mind and grow their wealth, which will positively impact generations to come.
Wherever you come from, you are welcome here!
Like anything in life, you want to make sure you’re learning from people who yes, have knowledge and expertise in the area, but also from those who continue to practice what they preach.
That’s what truly makes the XSITE Capital team so special and is why you can trust that the education you receive is coming from a place of knowledge, experience and current practice.
Our Co-Founders, Julius Oni, Leslie Awasom and Tenny Tolofari joined their passions together to help busy professionals like them reach financial freedom by investing in multifamily real estate.
Julius is the CEO and Co-Founder and primarily focuses on Investor Relations. Prior to XSITE Capital, Julius’ investment focus was single family real estate and angel investing. Over the past several years, Julius has invested in over 50 start-ups, and currently sits on the advisory board of four healthcare-related start-ups.
Within the last 2 years, Julius led the acquisition of XSITE Capital’s fast-growing portfolio of more than $100M. He was also acknowledged as a Forbes Business Council member in 2021.
Leslie is the Director of Operations and Co-founder who manages the company operations, market/data analysis, cash flow and budget analysis. In 2017, Leslie bought his first investment property and transitioned to multifamily investing in 2019.
Lastly, Tenny is the Director of Acquisition and Co-founder. Prior to forming XSITE Capital, Tenny spent several years leading a major sales team in one of the fastest growing financial services companies in America. He is also a Global Cyber Security professional, supporting the likes of Boeing and Deloitte.
The three of them together host a rapidly growing multifamily-focused meetup in Maryland where they provide resources and add value to individuals interested in growing their wealth and changing their financial future.
On a daily basis, Julius, Leslie and Tenny strive to provide the information and education that they believe everyone should have access to in order to grow their mind and simultaneously grow their wealth.
To ensure that you receive the information and education that you need to feel confident about taking action on a real estate endeavor, our team at XSITE Capital makes it a priority for you to have a constant line up of opportunities to choose from.
Here’s what those opportunities look like:
Every month on the blog, you can find a new blog post that answers the questions that many people don’t talk about when it comes to investing in commercial real estate. Our goal is to make things as simple as possible for you so that you can easily understand the benefits waiting for you on the other side.
Upcoming blog topics include:
In addition to the blog posts each month, we like to get face to face with you and provide valuable, free education. Monthly meetups feature talks from the XSITE founders in addition to other trusted and highly sought after industry leaders to educate on various topics.
Past meetup topics have included:
All monthly meetups are totally free and anyone is welcome to join! For all monthly meetup information, join the XSITE Investors Club!
We treat all Investor Club members like insiders which means you get the closest look into what’s going on at XSITE Capital, including what the team is working on and new deals that are available to you.
Just like we encourage you to consistently be learning, we do the same. We firmly believe that knowledge is a key part of wealth, so each month we share articles, books and research that we’re currently reading that’s relevant to real estate, investing and personal growth.
Our annual e-book is another free resource that all Investor Club members receive that aims to dive deeper into one topic regarding investing in commercial real estate.
The 2022 annual e-book is coming soon, so make sure you join the club so you don’t miss out!
Overall, we are committed to providing relevant and valuable information and education for those who are interested in experiencing financial freedom and creating legacy wealth through multifamily real estate investing.
We are glad you’re here!
– The XSITE Capital Team
Many people hear about multi-family investing, but they don’t fully realize the benefits that come with it.
So, let’s breakdown the 6 major benefits of multi-family investing
1. Multi-family real estate is a recession-resilient investment.
Most investors are expecting a recession following the effects of the current pandemic and with stocks soaring, many are also considering whether it’s a bubble.
But one investment that stands the test of time during bear and bull markets is multifamily real estate investments.
So, if you’re looking for an option to round out your investment portfolio, this is a good place to start.
2. Demand for apartment rentals is rising.
According to the Pew Research Center, more households are renting now than at any time in the past 50 years.
Between the 10-year period from 2006 to 2016, the number of households grew, but renters outpaced homeowners in that growth.
Fast forward 4 years later to 2020, and the US Census Bureau indicates that rental vacancy rates have decreased and median asking rent continues to increase.
The asking price for sale units has also decreased.
While the economic downturn will impact apartment demand, the overall growth rate is sufficient to absorb new supply entering the market.
3. Apartments offer a steady stream of income.
The statistics show that the apartment rental market continues to increase in demand and, therefore, value.
So, you have an opportunity to diversify your investments into an option that delivers a steady income stream which you can expect each month.
Apartment or multifamily units offer better economies of scale and thus higher returns on investment.
As of August 2020, the NCREIF Property Index estimated annualized returns over a 5 year period on real estate investment at 5.79%.
4. They are true passive income sources.
We’re often told that wealth starts with building passive income streams, where your money continues to work for you and nowhere is this more evident than in a multi-family investment.
Without needing to lift a finger to maintain your properties, your investment in a multifamily unit(s) continues to yield income month over month, plus your property continues to appreciate as time goes by.
5. Multifamily investing has many tax benefits.
Multifamily real estate investment offers high tax-advantages that many people don’t know about.
If you use a mortgage to finance your investment (which most savvy investors do) you can take a high mortgage deduction in the first year of ownership.
Then, you can depreciate the property, which means you can set off this depreciation against your rental income.
This alone makes multifamily real estate investing an attractive option, especially for those savvy with the tax laws.
6. There are multiple ways to get involved in multifamily investment.
There are multiple ways to get involved in this type of real estate investment including the most passive route and invest via syndication or you can invest in a multifamily fund or a real estate investment trust (REIT).
If you want to learn more about how to get started in multi-family real estate investing, here are two ways to get started:
1. Join the XSITE Capital Investment Club
2. Attend one of our free Monthly Meetups
3. Dive into our resources including, the XSITE Capital Blog or connect with us on LinkedIn
Generating passive wealth – aka making money while you sleep – is a nice idea.
But as a busy professional, most of the passive wealth generation ideas being bandied about aren’t truly passive. Or at least they won’t be truly passive until a few years down the road. Most require your active participation to get them up and running.
Based on your workload now, you just don’t have the time for that.
You don’t need a second job, just additional sources of revenue.
Therefore, you need a truly passive avenue to invest, which offers real returns.
Truly passive wealth means investing in assets that generate income for you, meaning your money works for you, not you working to earn.
The aim of passive wealth generation is to help you eventually replace your earned income to a point where you can choose to work or not.
It frees up your time to take on challenges you want to focus on or spend more time with your family.
For those who successfully achieve true passive wealth generation, they can retire from being “busy professionals”, and start to live life as they see fit.
You will notice that we didn’t use the term passive income, and that’s deliberate.
Wealth creation is a long-term process and will not happen overnight. It also requires the discipline for reinvestment.
With passive wealth, it also means that in addition to your stable, predictable income, you are also enjoying asset appreciation and that primarily comes from investing in real estate.
The typical real estate investment process requires that you essentially become a property manager. You’ll need to manage tenant problems, handle late-night phone calls, management issues – the works. And even if you outsource property management, these are still ultimately your responsibility.
On the other hand, there’s property flipping. This means buying, fixing, and selling a property. This requires your active involvement in all aspects of the process. Hence, this cannot be a source of passive real estate investment.
None of these equate to what we recommend as passive wealth creation through real estate investment. As a busy professional, you do not have the time to dedicate to these types of projects.
The third option is one that we use at XSITE Capital to generate passive wealth for our clients who are often extremely busy professionals. To consider real passive wealth, you need to invest in real estate and the best option for passive real estate investment is by investing in commercial and real estate projects where you won’t need to manage the investment or the properties.
In this option, active ownership of property doesn’t mean ‘landlord’ with the attendant headaches. With passive investment, you allow those with the expertise to generate and manage the property investments on your behalf. You enjoy the returns in terms of income, tax benefits and asset appreciation.
This is often referred to as apartment syndication and is one of the smartest ways for real estate investment.
Building a strong wealth foundation – one that can last through multiple generations – should be your goal for passive wealth generation.
As long as you have the discipline and the right investment partners with you, you can build your passive wealth system.
If you’re interested in learning how to build passive wealth through multifamily real estate investment, click here!
There are many ways to build wealth and achieve financial freedom with real estate investing being just one of those many methods.
According to a Forbes magazine article “how the world’s billionaires got so rich”, real estate investing was one of the top 3 industries that have produced the most billionaires.
The real estate industry has been a great source of wealth for many generations prior, and that hasn’t changed in today’s reality.
For new and seasoned investors alike, multifamily investing is an excellent addition to your portfolio, and multifamily investing is a great way to build generational wealth.
“Multifamily” simply means multiple families dwelling in one building, such as apartment buildings.
Individuals, families and organizations can build generational wealth by investing in multifamily properties.
There are many benefits to investing in multifamily properties, especially considering:
There are many ways to invest in multifamily properties, including active investing, passive investing and debt investing.
An active investor goes out, sources great deals and purchases them.
A passive investor provides funds towards the purchase of the property and receives an ownership share of the building.
Finally, a debt investor provides the funds necessary for the purchase of a building as a loan over a defined period of time and receives interest payments.
As an active investor, you are responsible for identifying the right market and suitable properties in which you would like to invest.
The active investor also has to build the team necessary for the management of these big assets.
In a syndication model, the active investor:
Active investors are also responsible for making sure investors receive their promised returns.
The active investor typically owns 20-40% of the deal, and they receive a share of the cash flow from the building and any profits on exit based on their ownership share.
The passive investor is not involved in the day to day management of the asset.
Being a passive investor is ideal for busy professionals who are looking for stable alternative methods of investing.
Typically, passive investing works for investors who like the stability of real estate, but do not have the time to deal with the day to day management of big real estate assets.
The passive investor contributes money towards the purchase of these assets and receives a share of the entity which owns the asset.
As the income of the property grows, so does your investment. That’s because the value of these properties is based on income.
As a passive investor, it is not usual to earn 10-20% annual returns on your investment. In addition, you also receive multiple tax benefits derived from cost segregation studies and bonus depreciation. This can help erase any tax liabilities from all your passive real estate income.
Other savvy investors build and maintain generational wealth by being debt investors in multifamily properties.
Many savvy investors love multifamily assets because of the stability they can provide.
As a debt investor, you provide anywhere from 60 – 90% of the funds necessary for the purchase of multifamily assets as a loan, and receive an interest on the funds provided.
One huge advantage of being a debt investor is you occupy the first position on the capital stack, which means if something were to go wrong with the property, you are in the first position to get your money back.
This is usually done through family offices which are in charge of managing the wealth of wealthy families. Family offices love this type of investing because it is a good hedge against inflation as rent goes up with inflation, and the interest they receive helps their money grow.
Depending on what your goals are and where you are on your financial journey, you can use either one of these methods to grow and maintain generational wealth.
As the economy changes due to the COVID-19 pandemic, many other real estate classes are feeling the pinch but multifamily investing still remains strong.
This is consistent with what was seen in the 2008 recession as well. If you are looking for a great way to grow your wealth, multifamily investing is definitely one you should consider.
A word of caution however: it takes time to build generational wealth.
Multifamily investing is not a get rich quick scheme, so don’t expect to become a billionaire after your first investment. But due diligence coupled with hard work over time will produce exciting results.
If you’re ready to start investing in multifamily properties and grow your investment portfolio, click here to learn more about the process with XSITE Capital.
To purchase a home to flip, you’d have to put up all the capital (i.e. risk) yourself. You’d invest time and energy into flipping the house and be 100% responsible for all of the work. At the end of the day, you’ll probably make money, but it’s a one-time gain and is often taxed as ordinary income, not capital gains.
Also, consider that fewer and fewer millennials are buying homes, and boomers are moving into multifamily apartments and retirement communities at a rapid pace.
This means there are fewer buyers on the market and more renters.
What if there was a way to invest in real estate where you’d share the investment, get paid every quarter that cash flow was available AND be responsible for 0% of the effort to manage the property?
That’s what multifamily apartment investing is all about.
You make a one-time investment and get quarterly payments that are based on the building’s income and occupancy – not on neighborhood comps.
A professional team manages the building for you.
Plus, you get a huge tax advantage as a multifamily investor.
Even though you’re only putting down a percentage of the capital, you get pro-rated depreciation benefits on the apartment complex.
American entrepreneur and New York Times bestselling author Grant Cardone got his start with multifamily apartment investing and today he’s one of the most celebrated businessmen in the country.
In Cardone’s own words, “if you go into multifamily the right way, over the next decade it could be the best investment of your lifetime.”
After buying his first multifamily apartment building in the 90s, he learned what we already know so well:
Buying a single-family home is a liability that you pay every month. Buying a multifamily home is an investment that pays YOU every month.
If you’re ready to see what multifamily real estate could mean for you, click here to learn more!